What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-02-04 compared with 2020-11-05 · 91 added, 99 removed, 395 unchanged (32% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30, 2020

December 31, 2020

March 31, 2020

19 unchanged sentences

Common stock, $ .0001 par value:

120,000,000 shares authorized at September 30, 2020

120,000,000 shares authorized at December 31, 2020

and March 31, 2020;

1 unchanged sentence

Treasury shares) and 54,254,557 shares issued ( 17,968,966 shares outstanding, net of

Treasury shares) at September 30, 2020 and March 31, 2020, respectively

Treasury shares) at December 31, 2020 and March 31, 2020, respectively

Paid-in capital

Treasury stock ( 36,470,554 shares at September 30, 2020 and 36,285,591 shares at

Treasury stock ( 36,552,711 shares at December 31, 2020 and 36,285,591 shares at

March 31, 2020)

7 unchanged sentences

CONSOLIDATED INCOME STATEMENTS – UNAUDITED

Three Months Ended September 30,

Three Months Ended December 31,

Cost of revenues

7 unchanged sentences

CONSOLIDATED INCOME STATEMENTS – UNAUDITED

Six Months Ended September 30,

Nine Months Ended December 31,

Cost of revenues

7 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY – UNAUDITED

Three Months Ended September 30, 2020

Three Months Ended December 31, 2020

Stockholders'

Balance – June 30, 2020

Balance – September 30, 2020

( 546,204,000

Stock issued under employee stock

purchase plan

Stock issued under stock option plan,

2 unchanged sentences

Purchase of treasury stock

Balance – September 30, 2020

Balance – December 31, 2020

( 553,889,000

Three Months Ended September 30, 2019

Three Months Ended December 31, 2019

Stockholders'

Balance – June 30, 2019

Balance – September 30, 2019

( 494,472,000

Stock issued under employee stock

purchase plan

Stock issued under stock option plan,

2 unchanged sentences

Purchase of treasury stock

Balance – September 30, 2019

Balance – December 31, 2019

( 513,668,000

Six Months Ended September 30, 2020

Nine Months Ended December 31, 2020

Stockholders'

7 unchanged sentences

Purchase of treasury stock

Balance – September 30, 2020

Balance – December 31, 2020

( 553,889,000

Six Months Ended September 30, 2019

Nine Months Ended December 31, 2019

Stockholders'

7 unchanged sentences

Purchase of treasury stock

Balance – September 30, 2019

Balance – December 31, 2019

( 513,668,000

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED

Six Months Ended September 30,

Nine Months Ended December 31,

Cash Flows from Operating Activities

19 unchanged sentences

Exercise of common stock options

Exercise of employee stock purchase options

Purchases under employee stock purchase

Net cash used in financing activities

8 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020

December 31, 2020

Note 1 — Summary of Significant Accounting Policies

3 unchanged sentences

The unaudited consolidated financial statements herein have been prepared by CorVel Corporation (“the Company”, “we”, “our”, “us”) pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

The accompanying interim unaudited financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the audited consolidated financial statements for the latest fiscal year ended March 31, 2020.

The accompanying interim unaudited consolidated financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the audited consolidated financial statements for the latest fiscal year ended March 31, 2020.

Accordingly, note disclosures which would substantially duplicate the disclosures contained in the March 31, 2020 audited consolidated financial statements have been omitted from these interim unaudited consolidated financial statements.

2 unchanged sentences

In the opinion of management, all adjustments considered necessary for a fair presentation have been included.

Operating results for the three and six months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2021.

Operating results for the three and nine months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2021.

For further information, refer to the audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2020 included in the Company's Annual Report on Form 10-K filed with the SEC on June 10, 2020.

Reclassification:

The Company has reclassified certain amounts in its consolidated statements of cash flows for the period ended September 30, 2019 to conform to the consolidated statements of cash flows presentation for the period ended September 30, 2020.

The reclassification relates to the depreciation and amortization and operating lease liabilities amounts under operating activities.

Impact of COVID-19:

The COVID-19 pandemic has impacted and could further impact our operations and the operations of our suppliers and vendors as a result of quarantines, facility closures, illnesses, reduced medical services, and travel and logistics restrictions.

The COVID-19 pandemic has impacted and could further impact our operations and the operations of our customers, suppliers and vendors as a result of quarantines, facility closures, illnesses, reduced medical services, and travel and logistics restrictions.

The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted.

This includes, but is not limited to the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on our customers, suppliers, and vendors, the remedial actions and stimulus measures adopted by federal, state, and local governments, and to what extent normal economic and operating conditions can resume.

This includes, but is not limited to the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on our customers, suppliers, and vendors, the remedial actions and stimulus measures adopted by federal, state, and local governments, the effects of stay at home mandates, the distribution and effectiveness of vaccines, and to what extent normal economic and operating conditions can resume.

Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.

22 unchanged sentences

Note 2 – Revenue Recognition

As for April 1, 2018, the Company adopted ASC 606 using the modified retrospective method for those contracts which were not substantially completed as of the transition date.

The reported results for the three and six months ended September 30, 2020 and 2019 reflect the application of the guidance of ASC 606.

Revenue from Contracts with Customers

36 unchanged sentences

These factors indicate the Company is the principal and, as such, it is required to recognize revenue gross and service partner vendor fees in the operating expense in the Company’s consolidated statements of income.

The following table presents revenues disaggregated by service line for the three and six months ended September 30, 2020 and 2019:

The following table presents revenues disaggregated by service line for the three and nine months ended December 31, 2020 and 2019:

Three Months Ended

September 30, 2020

September 30, 2019

December 31, 2020

December 31, 2019

Patient management services

1 unchanged sentence

Total services

Six Months Ended

September 30, 2020

September 30, 2019

Nine Months Ended

December 31, 2020

December 31, 2019

Patient management services

12 unchanged sentences

Invoicing requirements vary by customer contract, but substantially all unbilled revenues are billed within one year .

September 30, 2020

December 31, 2020

March 31, 2020

7 unchanged sentences

For all fixed fee service agreements, revenues are recognized over the expected service periods by type of claim.

The table below presents the deferred revenues balance and the significant activity affecting deferred revenues during the six months ended September 30, 2020:

Six Months Ended

September 30, 2020

The table below presents the deferred revenues balance and the significant activity affecting deferred revenues during the nine months ended December 31, 2020:

Nine Months Ended

December 31, 2020

Beginning balance at April 1, 2020 (Note 8)

1 unchanged sentence

Revenue recognized from additions

Ending balance at September 30, 2020 (Note 8)

Ending balance at December 31, 2020 (Note 8)

Remaining Performance Obligations

As of September 30, 2020, the Company had $ 20.5 million of remaining performance obligations related to claims and non-claims services for which the price is fixed.

As of December 31, 2020, the Company had $ 22.5 million of remaining performance obligations related to claims and non-claims services for which the price is fixed.

Remaining performance obligations consist of deferred revenues.

9 unchanged sentences

Note 3 — Stock-Based Compensation and Stock Options

Under the Company’s Restated Omnibus Incentive Plan (formerly the Restated 1988 Executive Stock Option Plan) (“the Plan”) as in effect at September 30, 2020, options exercisable for up to 20,615,000 shares of the Company’s common stock may be granted over the life of the Plan to key employees, non-employee directors, and consultants at exercise prices not less than the fair market value of the common stock on the date of grant.

Under the Company’s Restated Omnibus Incentive Plan (formerly the Restated 1988 Executive Stock Option Plan) (“the Plan”) as in effect at December 31, 2020, options exercisable for up to 20,615,000 shares of the Company’s common stock may be granted over the life of the Plan to key employees, non-employee directors, and consultants at exercise prices not less than the fair market value of the common stock on the date of grant.

Options granted under the Plan are non-statutory stock options and generally vest 25 % one year from the date of grant with the remaining 75 % vesting ratably each month for the next 36 months.

The options granted to employees and the Company’s Board of Directors expire at the end of five years and ten years from the date of grant, respectively.

All options granted in the six months ended September 30, 2020 and 2019 were granted with an exercise price equal to the fair value of the Company’s common stock on the grant date and are non-statutory stock options.

All options granted in the nine months ended December 31, 2020 and 2019 were granted with an exercise price equal to the fair value of the Company’s common stock on the grant date and are non-statutory stock options.

The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model with the assumptions included in the table below.

The Company uses historical data, among other factors, to estimate the expected volatility, the expected dividend yie ld and the expected option life.

The Company account s for forfeitures as they occur, rather than estimating expected forfeitures.

The Company uses historical data, among other factors, to estimate the expected volatility, the expected dividend yield and the expected option life.

The Company accounts for forfeitures as they occur, rather than estimating expected forfeitures.

The risk-free rate is based on the interest rate paid on a U.S.

Treasury issue with a term similar to the estimated life of the option.

The following assumptions were used to estimate the fair value of options granted during the three months ended September 30, 2020 and 2019 using the Black-Scholes option-pricing model:

The following assumptions were used to estimate the fair value of options granted during the three months ended December 31, 2020 and 2019 using the Black-Scholes option-pricing model:

Three Months Ended

September 30, 2020

September 30, 2019

December 31, 2020

December 31, 2019

Risk-free interest rate

2 unchanged sentences

Expected weighted average life of option in years

For the three months ended September 30, 2020 and 2019, the Company recorded share-based compensation expense of $ 1,238,000 and $ 1,198,000 , respectively.

For the six months ended September 30, 2020 and 2019, the Company recorded share-based compensation expenses of $ 2,233,000 and $ 2,423,000 , respectively.

The table below shows the amounts recognized in the unaudited consolidated financial statements for stock compensation expense for time-based options and performance-based options during the three and six months ended September 30, 2020 and 2019, respectively.

For the three months ended December 31, 2020 and 2019, the Company recorded share-based compensation expense of $ 1,251,000 and $ 1,143,000 , respectively.

For the nine months ended December 31, 2020 and 2019, the Company recorded share-based compensation expenses of $ 3,484,000 and $ 3,566,000 , respectively.

The table below shows the amounts recognized in the unaudited consolidated financial statements for stock compensation expense for time-based options and performance-based options during the three and nine months ended December 31, 2020 and 2019, respectively.

Three Months Ended

September 30, 2020

September 30, 2019

December 31, 2020

December 31, 2019

Cost of revenues

6 unchanged sentences

Effect on diluted earnings per share

Six Months Ended

September 30, 2020

September 30, 2019

Nine Months Ended

December 31, 2020

December 31, 2019

Cost of revenues

6 unchanged sentences

Effect on diluted earnings per share

The following table summarizes information for all stock options for the three and six months ended September 30, 2020 and 2019:

Three Months Ended September 30, 2020

Three Months Ended September 30, 2019

The following table summarizes information for all stock options for the three and nine months ended December 31, 2020 and 2019:

Three Months Ended December 31, 2020

Three Months Ended December 31, 2019

Exercise Price

5 unchanged sentences

Options outstanding, ending

Six Months Ended September 30, 2020

Six Months Ended September 30, 2019

Nine Months Ended December 31, 2020

Nine Months Ended December 31, 2019

Exercise Price

5 unchanged sentences

Options outstanding, ending

The following table summarizes the status of stock options outstanding and exercisable at September 30, 2020:

The following table summarizes the status of stock options outstanding and exercisable at December 31, 2020:

Range of Exercise Price

4 unchanged sentences

$87.50 to $88.22

The following table summarizes the status of all outstanding options at September 30, 2020, and changes during the three months then ended:

The following table summarizes the status of all outstanding options at December 31, 2020, and changes during the three months then ended:

Exercise Price

Aggregate Intrinsic

Value as of September 30, 2020

Options outstanding at July 1, 2020

Value as of December 31, 2020

Options outstanding at October 1, 2020

Cancelled – forfeited

2 unchanged sentences

Ending vested and expected to vest

Ending exercisable at September 30, 2020

The weighted-average grant-date fair value of options granted during the three months ended September 30, 2020 and 2019, was $ 22.39 and $ 24.90 , respectively.

Ending exercisable at December 31, 2020

The weighted-average grant-date fair value of options granted during the three months ended December 31, 2020 and 2019, was $ 25.20 and $ 22.23 , respectively.

Included in the above-noted stock option grants and stock compensation expense are performance-based stock options that vest only upon the Company’s achievement of certain earnings per share targets on a calendar year basis, as determined by the Company’s Board of Directors.

1 unchanged sentence

However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options.

The Company recognized $ 510,000 and $ 470,000 of stock compensation expense for the three months ended September 30, 2020 and 2019, respectively, for performance-based stock options.

The Company recognized $ 513,000 and $ 400,000 of stock compensation expense for the three months ended December 31, 2020 and 2019, respectively, for performance-based stock options.

The Company recognized $ 1,316,000 and $ 1,413,000 of stock compensation expense for the nine months ended December 31, 2020 and 2019, respectively, for performance-based stock options.

Note 4 — Treasury Stock

5 unchanged sentences

The Company had temporarily suspended share repurchases under its stock repurchase program from March 21 through June 14, 2020.

During the three and six months ended September 30, 2020, the Company repurchased 150,325 shares of its common stock for $ 12.0 million at an average price of $ 80.10 per share and 184,963 shares of its common stock for $ 14.4 million at an average price of $ 78.07 , respectively.

The Company had 17,908,338 shares of common stock outstanding as of September 30, 2020, net of the 36,470,554 shares in treasury.

During the period subsequent to the quarter ended September 30, 2020, the Company repurchased 25,513 shares of its common stock for $ 2.3 million at an average price of $ 90.11 per share under the Company’s stock repurchase program.

During the three and nine months ended December 31, 2020, the Company repurchased 82,157 shares of its common stock for $ 7.7 million at an average price of $ 93.54 per share and 267,120 shares of its common stock for $ 22.1 million at an average price of $ 82.83 , respectively.

The Company had 17,887,043 shares of common stock outstanding as of December 31, 2020, net of the 36,552,711 shares in treasury.

During the period subsequent to the quarter ended December 31, 2020, the Company repurchased 28,664 shares of its common stock for $ 3.0 million at an average price of $ 104.62 per share under the Company’s stock repurchase program.

Note 5 — Weighted Average Shares and Net Income Per Share

Basic weighted average common shares outstanding decreased to 17,937,000 for the quarter ended September 30, 2020 from 18,452,000 for the quarter ended September 30, 2019.

Diluted weighted average common and common equivalent shares outstanding decreased to 18,174,000 for the quarter ended September 30, 2020 from 18,771,000 for the quarter ended September 30, 2019.

Basic weighted average common shares outstanding decreased to 17,960,000 for the six months ended September 30, 2020 from 18,488,000 for the six months ended September 30, 2019.

Diluted weighted average common and common equivalent shares outstanding decreased to 18,144,000 for the six months ended September 30, 2020 from 18,779,000 for the six months ended September 30, 2019.

Basic weighted average common shares outstanding decreased to 17,899,000 for the quarter ended December 31, 2020 from 18,253,000 for the quarter ended December 31, 2019.

Diluted weighted average common and common equivalent shares outstanding decreased to 18,180,000 for the quarter ended December 31, 2020 from 18,526,000 for the quarter ended December 31, 2019.

Basic weighted average common shares outstanding decreased to 17,939,000 for the nine months ended December 31, 2020 from 18,410,000 for the nine months ended December, 2019.

Diluted weighted average common and common equivalent shares outstanding decreased to 18,156,000 for the nine months ended December 31, 2020 from 18,695,000 for the nine months ended December 31, 2019.

Net income per common and common equivalent share was computed by dividing net income by the weighted average number of common and common share equivalents outstanding during the period.

The following table sets forth the calculations of the basic and diluted weighted average common shares for the three and six months ended September 30, 2020 and 2019:

Three Months Ended September 30,

The following table sets forth the calculations of the basic and diluted weighted average common shares for the three and nine months ended December 31, 2020 and 2019:

Three Months Ended December 31,

Weighted average common shares outstanding

4 unchanged sentences

Net Income per share

Six Months Ended September 30,

Nine Months Ended December 31,

Weighted average common shares outstanding

18 unchanged sentences

Note 8 — Accounts and Taxes Payable and Accrued Liabilities

The following table sets forth accounts payable, income taxes payable, and accrued liabilities at September 30, 2020 and March 31, 2020:

September 30, 2020

The following table sets forth accounts payable, income taxes payable, and accrued liabilities at December 31, 2020 and March 31, 2020:

December 31, 2020

March 31, 2020

2 unchanged sentences

Total accounts and taxes payable

September 30, 2020

December 31, 2020

March 31, 2020

29 unchanged sentences

Three Months Ended

September 30, 2020

September 30, 2019

December 31, 2020

December 31, 2019

Operating lease expense

3 unchanged sentences

Total lease expenses

Six Months Ended

September 30, 2020

September 30, 2019

Nine Months Ended

December 31, 2020

December 31, 2019

Operating lease expense

4 unchanged sentences

The following table presents the lease related assets and liabilities recorded on the Company’s consolidated balance sheets related to its operating leases:

September 30, 2020

December 31, 2020

March 31, 2020

6 unchanged sentences

Weighted average discount rate

Supplemental cash flow information related to operating leases for the six months ended September 30, 2020 and 2019 were as follows:

Six Months Ended

September 30, 2020

September 30, 2019

Supplemental cash flow information related to operating leases for the nine months ended December 31, 2020 and 2019 was as follows:

Nine Months Ended

December 31, 2020

December 31, 2019

Cash paid for amounts included in the measurement of operating

4 unchanged sentences

lease liabilities

As of September 30, 2020, maturities of operating lease liabilities for each of the next five years and thereafter are as follows:

As of December 31, 2020, maturities of operating lease liabilities for each of the next five years and thereafter are as follows:

Total lease payments

1 unchanged sentence

Total lease liabilities

As of September 30, 2020, the Company has approximately $ 7.9 million of additional operating lease commitments that have not yet commenced.

As of December 31, 2020, the Company has approximately $ 6.1 million of additional operating lease commitments that have not yet commenced.

These leases commence in 2021 and have lease terms between 2 years and 8 years.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements